Critically discuss the divergent views on liberalizing the defence sector in India.

Published: February 19, 2018

Liberalisation brought in the new era for the process of Industrialisation by aiding in enhancing domestic and global competitiveness. Due to the strategic reasons the defence sector was not liberalized. Now a strong case has been made for liberalisation of defence sector.
Why there is a need to liberalise the defence sector?

  • Indian armed forces are working with obsolete military equipments. As a result there are large gaps. Liberalisation can aid in attaining efficiently these gaps by encouraging greater role for private sector in defence production.
  • India needs to reduce its dependency on the imports. Liberalisation would give impetus to the private sector for investing in defence production.
  • To augment the capacity under make-in-India defence by effectively utilizing the options under the defence offset policy.
  • India’s entry to MTCR, Wassenaar group will open up the plethora of opportunities for Joint ventures. Private sector must be strengthened to utilize these opportunities for the success of Make-in-India.

But the divergent views include:

  • It is an over simplistic assumption that liberalisation will automatically result in indigenisation and self-reliance in defence sector is flawed.
  • Indian private sector has neither technology nor resources to engage in defence production. Therefore keep in mind the strategic importance of the defence sector the government must take the lead through public enterprises rather than relying on private sector.
  • Defence is more of strategic area rather than mere commercial transactions. Concerns like profit motive of private sector, lock outs and instabilities cannot be sidelined.
  • Any compromises due to data leaks as happened in case of scorpene leaks will leave government with limited avenues for the grievance redressal.

Though there are some concerns with respect to liberalisation it would be unwise to take a stand against liberalisation. The wise way is to capitalize the benefits of liberalisation by addressing the concerns.

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